U.K. Professional Clients
U.K. Private Customers
Before registering a holding company, understanding the basics can ensure your operations are legal. In order to register a holding company in the UK, there are some basic legal requirements you must meet.
First, the holding company must have a 10% share of the subsidiary company's original capital for a minimum period of 12-months. Second, the holding company in question must either be a member of a trading group or be a trading holding company.
In addition, the subsidiary company must meet those same trading terms. It is worth bearing in mind that the definition of trade is quite broad under UK law. To trade means to carry out almost any form of activity that aims to generate a profit. One of the main exceptions to this is financial companies.
Like other UK companies, holding companies are legally obligated to pay corporation tax rates. Corporation taxes are charged on the company's worldwide profits, not just the profits attracted in the UK. There are some tax benefits to registering a holding company in the UK.
Unlike some other European Union (EU) member states, the UK allows for foreign tax relief. This allows investors and directors to protect their assets. These companies must pay capital gains taxes when disposing of shares, but there are some exceptions.
This includes holding a minimum of 10% of the subsidiary company’s shares for a period of 12-months in the two years prior to share disposal. It can also include the holding company still being a trading company. Finally, the company could also be a member of a trading group or registered as a trading company in the period immediately after share disposal.
Like other companies, holding companies must also delegate roles responsibly to ensure the company’s success. While the strategic elements of generating money are down to the subsidiaries, there is still a need to discuss investments, direct, and produce financial accounts.
Acting irresponsibly in these areas can lead to investors in the company—particularly the director—being held accountable for wrongful trading. Individuals are more vulnerable to this if they act in their own interests rather than those of the company. Understanding the legal basics and exercising the same diligence seen within all corporations can avoid legal hiccups.
At Coddan, not only can we assist you in forming a holding company, we provide extensive post-formation services that can keep you on the right side of the law, doing the hard work for you so that you can get on with business.